How To Build A Strong Trading Strategy????

1. More than just one technical tool: a decent strategy should contain at least 2 different indicators, one of them is a leading indicator and the other one is a lagging one while 3 indicators will give you a more slower signal but it'll be a more stronger one.
2. A fundamental rating measurement factor to measure the news effects: this would be a self-established one which can be discovered by testing the news effects on the FOREX market and measure it to establish a factor that suits the trader.
3. The trading time frame: keep in mind that a scalper wouldn't wait to take confirmation from 2-3 indicators on a H1 chart, he is waiting usually for a tick up or down to enter his position, some other ticks and he is out.
4. Your account equity: what ever your trading strategy or trade length, never put all the eggs in one basket, keep an open eye on your equity, not your balance.
5. Risk factor: setup your daily risk ratio and never exceed it if you lost on a day, you'll never get back the money you lost by going emotional and try to achieve revenge. If you have to lose and you already lost the supposed risk ratio, stop trading at that day, have some rest then try to study that position and the mistake that did lead to that losing trade.
6. Daily targeted profit: when you get your target achieved, take rest and save your efforts for studying the next day opportunities. If you are about continue trading, set a stop loss of no more than half the achieved profit and don't go so greedy.

Weekly currency outlook

We are still seeing the Dollar struggle to fully round this next bend but we continue to see more upside opportunity in dollars than downside risk. Therefore we continue to favor buying dips as it has paid out over 5000 pips for us since June 1^st of this year. We expect to see many dips to buy this week so be ready for some entries, many of them will be either fading new highs or buying new lows so be warned it will not be comfortable…at first…but in time it will look like genius.

EUR/USD:

This pair continues to present medium term entry opportunities as it trades north of 1.50. We are looking for spikes early this week to sell into. Look for the herd to chase this thing for a bit so we could see spikes into at least 1.51-1.52.

GBP/USD:

We are happy sellers this week near the 1.68 handle and expect to have a few opportunities above that to sell into. We could see some squeeze potential up to 1.70 but all of those wicks are just that much more of a sell. We continue to see the BOE as being too loose and really the lapdog of the FOMC so until that changes we want to sell strength here as it is temporary at best!

USD/CHF:

Parity remains a solid support level at this time and near term we do expect it to hold.
We are looking to buy dips back towards parity over the next few weeks.

USD/JPY:

This pair continues to see wild volatility as the shift from using Yen for carry trades to Dollars continues. This pair and other crosses with the Yen will continue to see extreme periods of bi polar activity as global risk shifts away from Yen and towards Dollars.

AUD/USD:

This pair is in a bubble of its own partly due to the commodity bubble we have seen reflated this year. This will be the “canary in the coal mine”. As this pair turns back before hitting parity you will see it lead the way down just as it has lead the way up in this global ponsi scheme the central banks seem to be running.

USD/CAD:

This pair has also turned just before hitting parity. We expect to see it push back up towards 1.10 before the year is out.

Top 10 Biggest Mistakes Forex Traders Make

Alexander Elder

Alexander Elder is an enigma in the world of stock traders; he not only understands the details of the transactions, but also the mindset of the traders before, during and after the business deal. More importantly, he has successfully transferred this knowledge to common market behavior, making him the trader with an edge that those attending Dr. Elder’s seminars eagerly seek to imitate.

BOE GOVERNOR'S WORDS TANK THE POUND

The British Pound Sterling fell across the board on Wednesday, after the Bank of England’s Governor, Mervyn King, said a slide of the Pound could help UK exporters and aid Britain's recovery from recession.

The remarks came after the UK released data on inflation which came in below the target, a better than expected showing.

Investors are nervous however, even with the good inflation news, that after the elections early next year, the new government will implement a policy of fiscal tightening, which will likely cut the asset-buying program, a program that is widely hailed as a success.

At 10:15PM GMT, the British Pound was trading down 1.2% versus the US Dollar to .9288, down 1.02% to the Euro to .9042, down 1.15% to the Japanese Yen to 148.6, down 1.1% against the Swiss Franc to 1.6691 and down 1.06% versus the Australian Dollar to 1.7802.

Using Fibonacci Retracements with Support & Resistance Levels in Forex

One of the essential principles of applying technical analysis to forex trading in a profitable manner is that you want to see multiple confirmations for an entry point before you actually enter the market.

If you are making trading decisions based upon prominent candlestick formations on a long term chart, it would also be wise to check with a number of other indicators when you get a buy signal in order to make sure that there are no contradictions. In this article we are going to focus on how Fibonacci retracement levels coincide with support and resistance levels, and how you can use these two different technical indicators in conjunction with each other in order to yield accurate market entry signals.

Let’s start by defining what both of these types of indicators are. Fibonacci retracements are based on the number 1.618 (also called the Golden Ratio) that is found in all natural orderly systems from flowers to the human body to the financial markets. Over the years it has been proven that when the price of a currency pair has a large move and then retraces back in the direction of the previous value, it is statistically more likely to rebound at the levels of 38.2%, 50%, and 61.8% of the original price move.

The way that many traders use Fibonacci retracement levels is to determine when to enter and when to exit the forex market. A Fib retracement can give a buy signal when the price hits one of the three Fib values and then rebounds, or it can show that the market is ‘running out of steam’ and it is time to exit when the price approaches one of the three Fib values and then falls. While Fib levels can be excellent indicators, it is never wise to enter into a trade based on these values alone.

Support and resistance levels are pretty much exactly what they sound like: Support levels are the price values below the current price data that the market will tend to rebound off of, and resistance levels are exactly the same except they are above the current price data. Support and resistance levels can offer strong forex entry signals when the price breaks through an established level, as when this happens the price has a tendency to continue moving in that direction.

S&R levels and Fib retracements are both powerful trading tools individually, but when you combine them together the trading signals become much stronger and more reliable. As mentioned above, a Fib retracement can give a strong market entry system when the price retraces a given movement and then switches direction around one of the three main Fib values.

As a general rule of thumb when trading the forex market, the longer the time frame of a chart, the more reliable the trading signals that are generated. So if you happened to be looking at a 4-hour or 8-hour chart and you saw a strong Fib retracement signal, the way that you could confirm this signal using support and resistance levels is to see whether the Fib value is also a predominant S&R level.

If the price bounces off the S&R level, this is not as strong an indication for market entry as when the price passes through an established level, because once the price crosses an established support or resistance level then it has a tendency to continue moving in that direction.

Forex Conquest Review

The beta-testers of the new Forex automated trading software called The Forex Conquest have reported being able to generate as much as $1,300+ every day using it. It is able to start trading with a starting capital of as small as $200, compounding returns as it starts making profitable trades. The Forex Conquest utilizes internal tools to help it calculate optimal entry and exit points automatically.

After going through major improvements over the past few years, The Forex Conquest is finally able to achieve its maximum accuracy in determining trend movements accurately.

The Forex Conquest Software Is Officially Released On Tuesday 3rd Nov, 2009 at 11a.m EST

Now you can download some free gifts from Forex Conquest team.

1) Channel Profit Alerter software

This amazing gift is created by Nick Channon and The Forex Conquest team. Download it, unzip the file and read the instruction. It should take you 5 minutes to get it running.
Plus, you will also be able to find out more about how Nick turned his $3000 investment to $150k in a short time…merely with forex trading.

Please read the manual guide if you are not familiar with MetaTrader. “Channel Profit Alerter” is a small gift from The Forex Conquest team and we are glad that you like it.

Top Automatic Forex Robot-Forex Invasion Reviews

This FAP turbo review 2009 will look into the FAP turbo expert advisor. This newsletter will identify if the declared expert advisor robot is earning money or not. This EA is a Metatrader four foreign exchange trader machine. You set it onto 15-minute charts and just leave it to do its stuff. See more about best forex trading robots compared below. The testing started on January five, 2009 with a start up capital of £500. The writer was using the EURGBP currency pair. It did not happen to just the writer but also to a number or people, in particular traders of the same currency pair.

The loss was quite large since 2 weeks’ worth of profit all went into smoke. This robot still can make money. You may be considering why FAP turbo review 2009 still gave this expert counsel a positive review after a very bad loss. The reason behind Jan 19th’s draw down was the incontrovertible fact that the banking world of the United Kingdom crashed at that point. See more about best forex trading robots compared below. See more about best forex trading robots compared below. Why did this happen? Are not these EA’s built with risk avoidance systems? The answers to these questions are quite plain. The EA itself has some failings, just like any application. It is not perfect. You will still need to glance at the markets and check for any signs of volatility. These categories of scenario only happen often. The bottom line is that this EA will still make you a lot of money. After the draw down, the writer was able to recuperate his losses and begin with an identical quantity just before the draw down. If you’re looking for a actually good forex robot, then this robot is the one for you. For FAP turbo review 2009, this automated expert advisor is reasonably good.

FAP Turbo is meant to immediately investigate trading info. It gives a real-time trading results from one or two accounts and the trader can get updates every fifteen mins.See more about best forex trading robots compared below. By using this software a trader is not required to have a big quantity of startup capital to proceed. See more about best forex trading robots compared below. It also employs a particularly distinctive algorithm method that allows it to prevent losses and optimize its returns. See more about best forex trading robots compared below.First, this is so easy to download and it would not take the majority of your time installing it. It also has a video tutorial that will give you step by step instructions on how to properly install and operate FAP Turbo.

There are pro consultants to watch the trading and will start orders if you want it. If and ever a user encounters some troubleshooting Problems with the software, FAP Turbo claims to a have a ready client support system that may handle clients’ queries, aside from the manual included in the package to help users install the system. See more about best forex trading robots compared below. Free updates for this programme are also offered. From here, you can get and download mandatory updates or program revision for your software. See more about best forex trading robots compared below. Like any ventures, money trading comes with lots of risks to take and avoid so it’s way better to first try the demo program available until you master the system and become used to its interface. After you refined your skills using this automated trader, you can let FAP Turbo do the trading and analyzing while you relax and luxuriate in the fruits of your investments.

Forex MegaDroid Reviews & Rating

Are you looking for reviews of the Forex MegaDroid software? If you have always been interested in automated currency trading systems, you will definitely be interested to see this. The number of people visiting the FX Megadroid website has been tremendous as more traders continue to recommend it after having good experiences with it.

1. How to Check if the Forex Megadroid Software is Worth the Money?

One thing you should check first is the winning percentage of the robot. Another equally important factor is the average amount of money that the software earns and loses for every winning and losing trade respectively. By understanding these 2 factors, you will immediately be able to analyze and conclude if the system is profitable or not.

Lastly, try to find out which currency pair the robot works best in. Most systems and software work best trading the EUR/USD pair since it is the largest and most liquid. However, there are others that are simply more profitable in tight and volatile markets as they can capitalize on the wild price swings.

2. How Much Money Do You Need to Invest In Order to Use Forex Megadroid?

One good thing about FX MegaDroid is that there is no need to purchase any more extra tools and indicators before you can start to use it. This is not always the case as there are other software retailers that will require you to buy additional software and indicators before their robots can work. Always find out if there are additional costs involved before you make the purchase.

3. Will the Forex MegaDroid Software Work for You?

I would say that I am very comfortable with its results so far, and I would highly recommend it to all currency traders. Before you decide if you want it, ensure that your PC processor can meet the requirements that the robot needs in order to run.

Best Forex Robot-Forex Broker Automate Autotrader

This FAP turbo review 2009 will look into the FAP turbo expert counsel. This newsletter will establish if the claimed expert advisor robot is earning or not. This EA is a Metatrader 4 foreign-exchange trader machine. It is automated BTW. You set it onto 15-minute charts and just leave it to do its stuff. This EA has actually been tested on live markets. The testing started on Jan five, 2009 with a start up capital of £500. The author was using the EURGBP currency pair. It did not happen to just the writer but also to a number or folks, specifically traders of the same currency pair. See more about best forex trading robots compared below.

The loss was quite huge since 2 weeks’ worth of profit all went into smoke. What happened? Is the EA any good at all? How did such a loss happen? These were the questions raised because of this debacle. This FAP turbo review 2009 closely researched the whole scenario and was in a position to draw a favorable conclusion. This robot still can earn money. You may be thinking about why FAP turbo review 2009 still gave this expert aide a positive review after a particularly bad loss. The GBP was significantly influenced, making it really changeable. The EA itself has some issues, just like any application. It isn’t perfect. In fact, nothing is perfect. The lesson the author was in a position to get was that you can’t just blindly turn on the EA and leave it as it is. If there are signs of this kind of situation, you just need to turn off the system for that day and skip trading. This is not so bad. These categories of eventuality only occur often. See more about best forex trading robots compared below. If you are looking for a really good foreign exchange robot, then this robot is the one for you. See more about best forex trading robots compared below.

FAP Turbo is intended to automatically analyze trading information. It gives a real time trading results from 1 or 2 accounts and the trader can get updates every 15 minutes.See more about best forex trading robots compared below. Its user-friendly interface allows user without technical data to work them without most of a bother. FAP Turbo could work around the clock all week without the trader’s intervention and is known for it’s almost 95% positive turnout in its 9 years since it was first conceived and has only less than 0.45% negative results. It also has a video tutorial that may give you step by step instructions on how to correctly install and operate FAP Turbo. Once installed, this automated trader is all set to do the trading for you with accurate results and trustworthy information.

There are pro consultants to watch the trading and will start orders if you want it. See more about best forex trading robots compared below. If and ever a user encounters some troubleshooting issues with the software, FAP Turbo claims to a have a ready customer support system that will handle clients’ questions, except for the manual included in the package to help users install the system. See more about best forex trading robots compared below. You may use this manual as a reference to guide you along the way if online help is not readily available. Free updates for this programme are also offered. It also provides lifetime customer membership on their internet site. From here, you can get and download obligatory updates or program revision for your software. See more about best forex trading robots compared below. Like any ventures, cash trading comes with lots of hazards to take and avoid so it is better to first try the demo program available till you master the system and get used to its interface. After you refined your skills using this automated trader, you can let FAP Turbo do the trading and researching while you sit back and luxuriate in the fruits of your investments.

A Beginner’s Guide to Short-Term Trading: How to Maximize Profits in III Days to 3 Weeks

SHORT-TERM TRADING: THE GOOD NEWS Maybe you’re a professional in your field, an entrepreneur, a retiree, a student, or a homemaker. You’ve probably observed the stock market and realized tidy profits can be made from the market’s current volatility. Whether you plan to trade on a full-time or part-time basis, the benefits of trading are fantastic.

If you make trading your full-time occupation, you can choose when, where, and if you choose to work. You can trade from any location, as long as your comp~ ter is hooked up to the Internet. Office politi~s? There are none. A persnickety boss? You’re the boss! Want to wear your bunny slippers to work? Do it! Catch the flu? Pull the covers over your head and stay in bed for as long as you want.
Got the time and money to take a week off? Have fun! If you’d rather trade
part-time, harmonize it with your regular job and add “luxury” money to your wallet. When you learn how to trade cautiously and wisely, your earnings may transform dreams into real rewards, such as the sailboat you always wanted, the vacation cottage in the mountains, or a college education for your children.

Here’s a benefit some folks don’t think of: When executed properly, short term trading can have lower risk than long-term investing. Many traditional buy-and-holders ride out bear markets fully invested, gritting their teeth while they watch their capital shrivel in value. Now you will know when to go “flat,” or close all of your positions. You’ll calmly put your holdings in cash during corrections and/or bear markets. And, you’ll have lots of money to shop with, when the bulls once again take control.

THE FLIP SIDE

The stock market is the most challenging arena on earth. It takes no prisoners. It’s a dog-eat-dog world, and only the fittest survive. Those who jump in without adequate knowledge or discipline usually get their heads handed to them in a hurry! To compete in this field, you have to be willing to persist and study hard. You have to cultivate the nerves of a bomb-detonator and develop the discipline of a marine corps drill sergeant. Short-term trading is riskier than socking your money into fixed income returns, such as Treasury bonds or money market funds. And the truth is, you will-especially at the beginning of the learning curve-experience losses. (The size of the losses are within your control.) Are you highly risk-averse? Does the thought of losing money send you running for the Maalox bottle? If so, you may want to choose a different investing avenue...

Top Forex Robot-Ea Forex Torrents

This FAP turbo review 2009 will look into the FAP turbo expert advisor. This article is going to establish if the said expert advisor robot is earning or not. This EA is a Metatrader four foreign-exchange trader machine. It is automated BTW. You set it onto 15-minute charts and just leave it to do its stuff. This EA has actually been tested on live markets. See more about best forex trading robots compared below. The testing started on January 5, 2009 with a start up capital of £500. The author was using the EURGBP currency pair.

The loss was quite huge since two weeks’ worth of profit all went into smoke. What happened? Is the EA any good at all? How did such a loss happen? These were the questions raised due to this screw up. This robot still can earn money. You could be considering why FAP turbo review 2009 still gave this expert advisor a good review after a particularly bad loss. See more about best forex trading robots compared below. The lesson the writer was in a position to obtain was that you can’t just blindly switch on the EA and leave it as it is. If there are signs of this sort of situation, you only need to turn off the system for that day and skip trading. This isn’t so bad. See more about best forex trading robots compared below. For FAP turbo review 2009, this automated expert advisor is reasonably good.

FAP Turbo is meant to immediately research trading information. It gives a real-time trading results from 1 or 2 accounts and the trader can get updates every 15 mins.See more about best forex trading robots compared below. By using this software a trader isn’t needed to have a huge quantity of start-up capital to proceed. It has the lowest start up capital which is about $50. FAP Turbo could work fulltime all week without the trader’s intervention and is known for it’s nearly 95% positive turnout in its nine years since it was first conceived and has only less than 0.45% negative results. It also employs a very particular algorithm method that permits it to forestall losses and optimize its returns. And because it is also equipped with a strict risk management program, FAP Turbo reduces holes better. It also has a video tutorial that will give you step by step instructions on how to properly install and operate FAP Turbo. Once installed, this automated trader is all set to do the trading for you with correct results and dependable information.

If and ever a user encounters some troubleshooting Problems with the software, FAP Turbo claims to a have a ready client support system which will handle clients’ queries, apart from the instruction book included in the package to help users install the system. You may use this manual as a reference to lead you along the path if online help is not widely available. Free updates for this programme are also offered. It also provides lifetime customer membership on their online site. See more about best forex trading robots compared below. Like any ventures, money trading includes plenty of risks to take and avoid so it is better to first try the demo program available until you master the system and become used to its interface. After you refined your talents using this automated trader, you can let FAP Turbo do the trading and analyzing while you relax and luxuriate in the fruits of your investments.

Daily Report: Aussie Rises on Employment Report, Dollar Consolidates

Australian dollar rises today on the back on unexpectedly good employment report. The job market expanded for another month by 24.5k in in October versus expectation of -10.1k contraction. Though, unemployment rate climbed from 5.7% to 5.8% as expected. AUD/USD soars to as high as 0.9368 so far. While upside momentum is diminishing a bit, there is still no clear sign of topping in Aussie yet and the current rise in AUD/USD might still extend further to a test of 2008 high of 0.9849. Against Euro, EUR/AUD, took out previous low of 1.6079 and dives to as low as 1.6017. We're still expecting further downside in the EUR/AUD cross towards lower trend line support at 1.5702 next.

Mid-Day Report: Sterling Pounded By BoE King's Comment

Sterling was knocked down earlier today after BoE Governor King said that the bank is "completely open mind" on extension of the quantitative easing program. King believes the program is "working and the risk of another depression has "sharply diminished". Nevertheless, it "will be a long, hard path back" to a robust economy. Also, King reiterated that "The depreciation of sterling should lead to a recovery in economic activity." Sterling is sharply lower against Euro and dollar after the comments.

In he Quarterly Inflation Report, BoE forecasts for GDP growth and inflation outlook. These estimates were made based on assumptions that the benchmark interest rate, currently at 0.5%, rises to market expectation of 1.1% in 3Q10 and 2.1% at 1Q11, as well as asset purchase program of 200B pound. BOE also anticipated inflation will rise sharply in the near-term and exceed the target level of 2% in 2012.

Also released from UK, unemployment rate was unchanged at 7.8% in September, better than expectation of a rise to 8.0%. Claimant count also rose less than expected by 12.9k in October.

Elsewhere, dollar dips to new low on dovish comments from Fed officials. Dollar Fed Fisher said that inflation is likely to remain subdued for some time and the near-zero interest rates are appropriate. He said growth was likely to be "suboptimal" into 2010 and 2011, with unemployment a "vexing problem." San Francisco Fed Yellen said the prospect of a “jobless recovery” in a speech yesterday. Atlanta Fed Lockhart expects a "relatively subdued" growth pace this quarter and beyond.

BOE Upgraded Forecasts on Growth and Inflation

At the quarterly Inflation Report in November, the Bank of England raised forecasts for GDP growth and inflation outlook as economy has expanded again and will not slip back into a recession. These estimates were made based on assumptions that the benchmark interest rate, currently at 0.5%, rises to market expectation of 1.1% in 3Q10 and 2.1% at 1Q11, as well as asset purchase program of 200B pound.

According to the quarterly Inflation Report, the UK's economy will undergo a 'slow recovery' and 'the outlook for inflation in the medium term is somewhat higher than the August report, reflecting the stronger projected distribution for GDP growth... the risks of inflation being above or below target are broadly balanced by the end of the forecast period'.

Although the nation's GDP surprisingly contract -0.4% qoq in 3Q09, the central bank revised up its GDP forecasts and signaled revisions of 3Q09 data. According to the BOE, upward revisions reflects the increased asset purchases, the lower interest rate path implied by market yields, the lower level of the exchange rate and a stronger outlook for world demand.

The BOE also anticipated inflation will rise sharply in the near-term and exceed the target level of 2% in 2012. According to the report, 'the risks of inflation being above or below the target are broadly balanced by the end of the forecast period. The outlook for inflation in the medium term is somewhat higher than in August, reflecting the stronger projected distribution for GDP growth'.

Australia Unemployment Rate Preview and EUD/AUD Outlook

(November 12, Thu) Australia unemployment rate - October: After a surprising increase in payrolls (+40.6K) in September, a modest decline in employment (-10K) is expected in October. This should have pushed the unemployment rate +0.1 percentage points higher to 5.8%. Although economic recovery has been robust in Australia, unemployment rate may continue to rise from current level in coming months. However, the peak should be lower than what was expected by the market in the first half of the year.

In September, the number of persons looking for full-time work increased by 9500 to 497 400 and the number of persons looking for part-time work decreased by 13 300 to 161 200. This halted the recent trend that workers looked for part-time jobs due to reduction in full-time unemployment. We believe the number of workers looking for full-time jobs should have increased further in October.

Also, aggregate monthly hours worked increased 13.4 million hours to 1522.4 million hours in September. This was driven by improvement of economic conditions. The trend should have continued in October.

Daily Report: Yen Recovers on Risk Aversion, BoE & ECB Watched

Yen recovers some ground today as Asians stocks dip after late selloff in US equities. Dollar follows by paring some of this week's losses as crude oil is back below 80 level while gold trades below 1090. Risk aversion would probably give the Japanese yen some further support as Japanese Nikkei closed below head and shoulder neckline support which should confirm medium term reversal. However, dollar's fate will continue to be tied between risk aversion and strength in gold.

FOMC statement overnight was largely inline with markets' expectations. Fed decided to leave the Fed funds rate unchanged at 0-0.25% and reiterated to keep it low for 'an extended period'. The Fed also listed conditions that warranted an unprecedentedly low level of interest rates: low rates of resource utilization, subdued inflation trends, and stable inflation expectations. In the meeting, policymakers also modestly upgraded its assessment of current conditions and reduced the amount of agency debt it purchased. These mildly positive factors partly offset the dovish tone of the post-meeting statement. More in FOMC Review: The Fed Disclosed Parameters For Making Rate Decisions

No Surprise from FOMC, Stocks Higher, Dollar Lower

Fed left rates unchanged at 0-0.25% as widely expected. The wordings that rates will be kept at exceptionally low level for an "extended period" of time was practically unchanged. After all, there was nothing special from the FOMC statement. Markets struggled to find directional initially after the release but dollar bears won the battle as markets digested the statement. The greenback is sharply lower against European majors as well as commodity currencies while stocks managed to climb again after some retreats.

Intraday bias in the dollar index remains on the downside for the moment and fall from 76.82 might still extend further even though 61.8% retracement of 74.94 to 76.82 at 75.65 is already met. Persistent strength in Gold and crude oil would likely continue to pressure the greenback in general. Nevertheless, we'd continue to expect strong support above 74.94 low to conclude the pull back from 76.82 in the dollar index. That could be translated into a retest of recent high in EUR/USD, GBP/USD and AUD/USD though.

Mid-Day Report: Dollar Remains Pressured ahead of FOMC

Dollar weaken sharply across the board today as Gold makes another record high of 1096 and is marching to 1100 level. Crude oil also follows by breaking 80 level too whole stocks rebounds strongly in general. ADP report showed the job market in private sector contracted -203k in October, slightly higher than expectation of -187k. Nevertheless, prior months' data was revised up from -254k to -227k. Challenger report also showed strong improvement of -50.7% fall in planned layoffs in October. Nevertheless, ISM non-manufacturing index missed expectation and fell slightly to 50.6 in October. Main focus now turns to FOMC rate decision and statement.

To be a highly successful trader, novice traders must have a good trading plan. Trading multiple positions can be difficult without proper money management. Usually, traders will develop their own techniques of money management, based on their financial positions, trading styles, etc. One of the most popular strategies in money management is the Pyramid strategy, using which traders can effectively multiply Forex gains, with a relatively low risk.

Pyramiding is a strategy in which traders take advantage of high performing assets, by adding new positions at upper levels or doing what is called ‘averaging up.’ Traders trade multiple positions, after an increase in assets, with an intent to maximize profits. Averaging in a falling market is a very dangerous strategy, as the assets are getting lost, rather than being acquired. Pyramiding provides opportunities for traders to increase their positions, as the market goes up and at the same time, reduces their risk exposure.

For example, Mr. X sees an opportunity in the USD/JPY pair and wants to trade with a $10,000 amount by taking a long position at 95.00. He also decides to take a stop loss of 2%, just in case the market goes against him. Rather than putting all of his money in at once, he decides to trade with $5000 and after an hour, when the trade goes in his favor, he invests an additional $3000 at 95.62. Let’s say the pair rises sharply from thereon, he invests a further $2000 at 97.65, closing the trade at 99 with a profit of 400 pips.

Practical Examples

1. Long Positions – In an example of the US Dollar and Swiss Franc (USD/CHF), where traders played with multiple positions and adding new positions at each successive move to new highs:

In this example, the main entry points at which traders make long positions are; 1.0562, 1.0801, and 1.0916. Here, the exit point is 1.1567, at which all the long positions are closed.

2. Short Positions- Like with the long pyramiding strategy, traders can also hedge their risk using a short pyramiding strategy. The only difference will be that the strategy is applied when the market is in a downtrend.

This is again an example of the US Dollar and Swiss Franc (USD/CHF), where traders play with multiple positions and add new positions, at each successive move to new lows. In this example, the main entry points at which trader makes short positions are; 1.1700, 1.1673, and 1.1408. Here, the exit point is 1.10901 at which all the short positions are squared off.

Key Take aways

Trading multiple positions without a good trading plan is very difficult but traders can make this easy, with the help of the Pyramiding strategy through which, traders can add more positions to the trade, whilst lowering their risk exposure at the same time.

Risk to Reward Ratio Explained…

Risk to reward ratio is used by traders and investors to
calculate the ratio of potential gain to potential loss
in a Forex trade. Mathematically, this ratio is calculated
by dividing the amount of the expected profit with the amount
of the assumed risk.

Risk to reward ratio = Risk (potential
loss*)/ Reward (Potential Gain**)

Before jumping into the market, traders should
know how to calculate the risk/reward ratio and how it is
applicable to trading. Risk is the most certain and dangerous
aspect of trading. Every trade carries some amount of risk
and it is essential for traders to know how much risk is
present in a particular trade and how he/she can minimize
that risk, so that their trading capital is protected. The
best way is to calculate it is by using the risk/reward
ratio.

For example,

1. If the trader is taking a risk of 1 pip to get the profit of 2 pips, then the risk/reward ratio is 1:2

2. If the trader is looking for a profit of 100 pips, with a tight stop loss of 75 pips, then the risk /reward ratio is 75:100 (75/100), which is 0.75.

3. If the trader is expected to earn the profit (reward)of $1320, with a stop loss of $350, then the risk /reward ratio is $1320:$350($1320/$350) or 3.7714:1.

How do you determine the risk/reward ratio?

Step 1 Risk – The very first step for a trader is to determine that how much risk is he/she is ready to assume on a particular trade. Stop loss is the best way through which traders calculate the risk value.

Step 2 Reward – Reward is the profit on an investment. Basically, this is the gain in currency pair value that a trader is hoping or attempting to earn from the currency price movement.

Example1. Let’s say a trader has an account with Easy-Forex and deposits $5000 in his/her account for 20:1 leverage. The trader can trade with $100000 with the help of leverage and decides to take a risk of only 2% of his/her trading capital, which is $100 ($5000 * 2%) and to book
profits, when the trading amount goes above $200. It means he/she will be out of the trade, once he/she is either -$100 or +$200.

Hence, Risk/Reward Ratio is = 100/200 = 1:2

Key Takeaways

Risks and reward are two sides of a single coin. Every one wants the reward side of the coin but nobody wants to accept the risk. Burying your head in the sand will not make the risk go away, but taking it out and doing a little homework will definitely make the risk hurt a lot less. The risk and reward ratio clears the loss that a trader will be looking at, from a potential Forex trade.

Crucial Money Management Guidelines

Money is the opposite of the weather. Nobody talks about it, but everybody does something about it”
- Rebecca Johnson

“Managing money requires more skill than making it.”

The last phrase indicates the importance of money management in trading and this is the key skill for traders, if they intend to earn large profits from the Forex market.

Money Management is the fundamental element of successful trading. It is the process of planning, organizing, and controlling money related matters in a Forex trading ’strategy,’ in which money management plays a crucial role in helping traders to establish a trading plan, work out their trading capital and make investments in accordance to their risk bearing capacity. Money management also helps in determining the ideal risk exposure for individuals.

Generally, money management is related to the allocation of funds, more specifically; diversification and portfolio management. This is the most important aspect of trading that every trader must know, to preserve capital and make gains.

Risk is something that nobody wants to see in their portfolio, but unfortunately it is present in every financial portfolio or a trading decision. To minimize or hedge the risks; money management is very vital.

How does it relate to Forex trading?

There is a popular quote in trading that goes like; “Never trade with money which you cannot afford to lose.” This quote is absolutely applicable here; novice traders must follow this rule by not trading in markets unnecessarily (or overtrading), without any clear direction or strategy. The importance of money management can be summarized as follows:-

1. Important in forming trading strategies - Money management is very useful in making trading strategies. A trading system with proper money management can provide mammoth returns to traders in the long term.

2. Helpful in managing risk – Managing risk is not difficult but it is nonetheless critical. Diversification and trading rules can be implemented to manage risk and reduce the downsides that are associated with a trade. For example, according to expert traders; averaging does not make sense in a falling market but it is good when the market goes up. Hence, when the market falls, they exit from long positions by taking a tight stop loss. On the other hand, if the market moves in their favor, they start adding new positions on every upward move.

3. Helps in defensive trading – For a beginner, money management is very helpful in defensive trading. Novice traders can use trading objectives, limits and strategies to remain within a moderate zone, without going overboard with aggressive and risky trades, while they still make good returns.

Key Takeaways

Based on the principles of money management, traders can stop trading if their portfolio or individual pair goes below a particular percentage of stop loss. The main motive behind money management is to place a limit on the likelihood and extent of losses. With the help of money management, traders can increase the number of winning positions and reduce losing positions, while balancing their investments with their risk.

Currency Trading Summary

U.S. Dollar Trading (USD) with stocks rallying for a 4th day the market went back into 'risk on' mode and the USD was on the back foot. Weekly Jobless claims were 512k vs. 530k previously. Q3 Productivity at 9.5% was very strong vs. 6.5% forecast. In US Stocks, DJIA +203 points closing at 10005, S&P +20 points closing at 1066 and NASDAQ +49 points closing at 2105. Looking ahead, October Non Farm Payrolls forecast at -175k vs. -263k previously. The October Unemployment rate is forecast at 9.9% vs. 9.8% previously.

The Euro (EUR) continued to find strength on dips as US stocks soared and the ECB was relatively upbeat at their ECB meeting were they held rates at 1.0%. The pair failed to track the gains completely on Wall st. as the market pauses ahead of the US Unemployment data tonight. Overall the EUR/USD traded with a low of 1.4810 and a high of 1.4920 before closing at 1.4880. looking ahead, September Industrial Orders are forecast at 1% vs. 1.45 previously.

The Japanese Yen (JPY) was strong is Asia as the Nikkei fell but then was sold for most of the day as the US had its biggest rally in 2 months. AUD/JPY and GBP/JPY led the rebound but the market was well contained again as the event risk of the NFP today contained risk appetite. Overall the USDJPY traded with a low of 89.97 and a high of 90.84 before closing the day around 90.75 in the New York session. Looking ahead, September Leading Indicators previously at 0.8%.

The Sterling (GBP) shot higher as the BoE increased the Asset purchase program by 25bn vs. 50bn forecast. The BoE held rates at 0.5%. The market found resistance above 1.6600 and settled below the figure. EUR/GBP support was in the low 0.89's. GBP/JPY reclaimed the 150 Yen level. Overall the GBP/USD traded with a low of 1.6639 and a high of 1.6464 before closing the day at 1.6580 in the New York session. Looking ahead, UK PPI Output prices are forecast at 0.3% vs. 0.5% m/m previously.

The Australian Dollar (AUD) good data could not help the Aussie rally in Asia as AUD/JPY selling dragged the pair to day lows before a change in sentiment pushed the pair higher once again in the US. September Trade Balance at -1.85bn vs. -2.1bn forecast. Overall the AUD/USD traded with a low of 0.9023 and a high of 0.9127 before closing the US session at 0.9105. Looking ahead, RBA Monetary Policy Statement.

Oil & Gold (XAU) consolidated gains settling just under $1100 level. Overall trading with a low of USD$1083 and high of USD$1095 before ending the New York session at USD$1091 an ounce. Fell back below $80 a barrel on profit taking after recent 3 day rally. Crude Oil was down $0.78 ending the New York session at $79.62.

WORLD FOREX: Euro Hovers Around $1.50 As Global Stocks Rally

NEW YORK (Dow Jones)--The euro remained strong against the dollar in early New York trading Monday, hovering around the psychologically important $1.50 mark, after rising global stocks suggested markets would shake off last week's disappointing U.S. jobs data and continue to load up on risk.

Finance ministers and central bankers at this weekend's meeting of the Group of 20 industrialized and developing nations didn't mention currencies in their official communique, removing what had been a possible obstacle to placing bets on higher-yielding currencies.

If U.S. stocks follow the lead of Asian and European exchanges, the euro and other higher-yielding currencies are likely to extend their gains against the dollar. U.S. stocks are expected to open higher.

In early morning trading, the euro was at $1.4991 from $1.4844 late Friday, according to EBS via CQG. The dollar was at Y89.95 from Y89.96, while the euro was at Y134.80 from Y133.53. The U.K. pound was at $1.6773 from $1.6608

The Dollar Index, a trade-weighted basket of six currencies, was at 75.109 from 75.784 late Friday. The index was flirting with nearly 15-month lows.

Positive Australian housing data overnight sent investors into the Australian dollar, which lifted other higher-yielding currencies. The Australian dollar hit a two-week high, at $0.9299, on the data that showed Australian housing-finance approvals rose 5.1% on the month in September, more than the 3% rise expected.

The continuing positive pace of Australia's economic rebound added to the view that the Reserve Bank of Australia may deliver more increases to its key interest rates in coming months, boosting investor sentiment for the currency.

Australia's economic turnaround contrasts with the disappointing U.S. jobs data reported Friday, which showed unemployment rose above 10%, its highest level in nearly three decades.

The weekend's G-20 meeting in Scotland also proved uneventful for financial markets. The group didn't mention currencies at all in its final communique. Some analysts had expected exchange rates would be discussed.

More direction appeared to come from comments by U.S. Treasury Secretary Timothy Geithner and U.K. Prime Minister Gordon Brown, who warned against ending financial-crisis support programs prematurely. In other words, there won't be any rush to tighten monetary policy, which should continue to weigh on the low-yielding U.S. dollar.

There are no key U.S. data Monday, which means the euro and other higher-yielding currencies should track the direction of the stock market.

(Nicholas Hastings in London contributed to this article.)

-By Bradley Davis, Dow Jones Newswires; 212-416-2654;

How to Calculate Forex Trading Profits and Losses

IMPORTANT KEY PIONTS

1. Some people spend all day talking to their brokers. Soros “prefers to talk to a select few people who can be really helpful ….” Then you need to think and read and reflect.

2. To be successful, you need leisure. You need time hanging heavily on your hands [to talk to people, read, and think].

3. If you have an investment thesis you like, run it by people who support the other side of the argument. See if you still like the thesis afterward.

4. Basically, the way Soros operates is to have a thesis and then he tests it in the market. If the market goes against his position and he feels uneasy (e.g. gets a backache), he cuts his losses.

5. What he took was basic information from various sources and kind of mulched it in his mind. Then he would come up with a thesis that most of the time was valid.

6. When Soros believed he was right … no investment position was too large. Holding back was for wimps. The worst error in Soros’ book was not being too bold.

7. The key to investing is knowing how to survive. That means at times playing conservatively, cutting losses when necessary and keeping a large portion of one’s portfolio out of play.

8. If you are doing poorly, retrench. Don’t try to recoup. And when you start again, start small.

9. To be in the game, you have to be willing to endure the pain.

10. Perhaps Soros’ most distinctive feature, the trait that explained his investment talents the best, was his ability to gain membership in a very ‘exclusive ‘ club that included the leadership of the international community…. Such encounters clearly gave Soros an advantage over other investors.

11. Invest first and then investigate … form a hypothesis, take a toehold position to test the hypothesis, and wait for the market to prove you are right or wrong.

Discretionary Traders

In browsing around the web I often encounter discussions of the merits of a particular trade and opinions about the direction of a market. I know that the traders who voice these opinions have good intentions and much of the discussions could be helpful to the person receiving the information. (Some of these discussions are on our Forum.) However the provider of the opinion must be very careful that he doesn’t start believing too strongly in his position because he has made the mistake of going public with it.

This is an important psychological issue that I seldom see discussed. Taking losses is always difficult and the reluctance to promptly acknowledge that we are on the wrong side of the market is probably the single most costly error a trader can make. Even under the best of conditions we hate to take losses. Publicly advocating a particular trade or the direction of a market just makes being wrong all the more painful and harder to accept. If we make it a policy to go around advocating the merits of our trades it will only make it harder to recognize when we are wrong.

Successfull forex traders

Would you like to enjoy the lifestyle of successful forex traders? If you were to split foreign exchange traders into two groups – the successful and the less than successful – could you identify those characteristics which separate the two groups?

It does not really matter what we do in life, which includes foreign exchange trading, but, whatever we do, one thing that will have more affect on our success than anything else we do will be setting goals.

It is a simple fact that the human mind works best when it is given a roadmap to follow and, by setting a goal, you start building your roadmap by clearly defining the end point of your journey. However fixing a destination is not sufficient and you will also need to define the route which you are going to follow to get to your destination. Here is an example.

Stock Trading

Stock Trading
1. Taking responsibility of your capital
2. Cut your losses early and let your Profits Run
3. Discipline
4. Too much information
5. Do not marry your trades
6. Do not bet the farm

1. Taking responsibility of your capital
It is interesting how many people are happy to place their savings and funds in other peoples hands, accept the losses as its easier to blame someone else than to take responsibility of those funds ourselves.

Foreign Exchange Market

There are various different ways in which traders can place orders to buy and sell currencies and this gives foreign exchange traders considerable flexibility in planning their trading strategies and allows them to both maximize their profits and minimize their losses.

Principle of profiting in exchange rates

The easiest way to demonstrate the ability to profit from Forex trading as the exchange rate rises and falls is to look at some examples. Let’s start by looking at how you might profit when exchange rates rise.

Let’s assume that you believe that the UK Pound is going to rise against the US Dollar and that you can buy GBP/USD at 1.8730. We’ll also assume that you are trading a standard InterBank lot of 100,000 so that 100,000 UK Pounds will cost 187,300 US Dollars.

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Advantages of Trading Currencies

Trading currencies (also known as foreign exchange, forex or fx) has many advantages over trading stocks and futures for both day trading and swing trading. Some are:

1. Long Trading Hours

A currency trader can pick and choose convenient trading hours because the market is open from Sunday at 5:00 PM EST to Friday at 4:30 PM EST.

2. Low Account Minimums

At some firms, you can day trade currencies with relatively low account minimums (may not be appropriate for all investors).

3. No Commissions

Trading currencies with our firm is commission free. Currency Trading USA gets compensated through the Bid/Ask spread instead.

4. Tight Bid/Ask Spreads

5. Flexible Margin Requirements

100:1 margin (1%) for forex trading is greater than for stocks and futures. Increasing leverage increases risk.

6. No Limit up / limit down

Unlike in futures, FX trading is not suspended when the prices move too much in one direction.

Learn Currency Trading And Profit

When trying to learn currency trading at first, it was difficult. This hard phase soon went away after finding out about forex scalping. Forex scalping would have to be the quickest style to learn, and great for the beginner. In just a matter of a few weeks a new trader can start to make profits. After I learned scalping I incorporated this one method the gurus swear by, and it has lead to my trading account doubling every month!

When learn currency trading? At first I only spent a few hours here and there on my forex. This was soon to end after realizing that I needed to put more time into it to get any kind of results. Dedication took over, and results started accelerating. Once a trader realizes that they need to keep them self in a hardcore trader mindset and put time in, their success will come. Adding this one method to my trading and being dedicated resulted in my trading account doubling in a month!

Where can I learn currency trading when there are so many sources to learn from? This can sometimes be a hard obstacle for a beginner. Good information on the internet can sometimes be hard to find, especially if it has to do with making money. The big traders never like to give out their tactics and they pretend that no one knows about them. Once I discovered this one dominating method that they use, I put it to the test in my scalping. In the first two weeks I ended up doubling my trading account!

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Is the Fed Hurting the Dollar in the Long-Term?

By now, everyone is surely familiar with the measures that the Federal Reserve Bank and US Treasury (under the auspices of the US government) have unveiled to blunt the impact of the credit crisis. The accompanying debate, regrettably, has dwelled on matters of efficacy; in other words, are such measures adequate to stimulate the economy and prevent it from sliding into long-term recession? Only a few analysts have taken to pondering the long-term monetary implications of such policy-making. This is to be expected, since those who call for restraint have always been outnumbered by those favoring bold (and expensive) action. Besides, the Fed has always had critics, namely those who advocate a return to gold standards But perhaps this time is different. In recent memory, the stakes have never been so high, and the global economy has never been so imbalanced. Accordingly, the Fed and the Treasury must be careful that in treating the economic crisis, they don’t inadvertently damage the very foundation of the US economy.

Can China Avoid a Post-Olympic Economic Downturn?

Economics analysis indicates that countries that host the Olympic Games typically suffer from economic decline and currency depreciation in the months following its conclusion. The "so-called ‘Valley Effect’ is mainly caused by a dramatic increase in investment in the pre-Olympics stage, accompanied by a boom in consumption and revenues, [but] investment and consumption shrink in the post-Olympic stage." On the surface, China fits this mould, as it spent upwards of $40 Billion building venues and upgrading infrastructure in preparation for the Games. At the same time, most economists agreed that the Chinese economy was both more robust and more diverse than previous hosts, and could even receive an economic boost from the Games, as a result of increased media exposure and tourism.

The first bump in the road came in the form of a tainted products scandels, which led to the recall of dozens of items, including toys, medicines, and most recently, dairy products. Then came the credit crisis, which exploded in the US and quickly spread to the rest of the world. While the implications for China are not entirely clear (for reasons that will be discussed below), it seems almost certain that the economy will take a hit. In which case, it probably won’t be possible to disentangle the (negative) economic impact associated with the Olympics from the general economic downturn, but I don’t imagine this is of much concern to investors, anyway. Given the rising prominence of China within the framework of the global ecomony analysts are watching with baited breath to see if and how China can avoid a dreaded economic downturn.

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US Dollar Will Have to Weigh 3Q GDP for Fundamental and Risk Impact

What little strength the dollar seems to find during the trading week seems to ultimately be swept away by the financial markets’ primary fundamental driver – sentiment. Whether or not the dollar makes for the ideal funding currency to the recuperating carry trade, it has already been put into that niche; and the rationale of the situation will not be reevaluated until either the trend stalls or there is a prominent change in the dollar’s fundamental makeup. There is the sense that this currency has resigned to a seeming permanence in its role as the FX whipping boy and the steady decline to fresh 14-month lows day after day. However, while the rise in risk appetite has maintained its bearing, it has a lost much of its fervor. This could signal the first stage of a reversal in yield appetite (and the subsequent recovery in the US dollar); and it could open the door for the big ticket 3Q GDP release to finally loosen sentiment’s hold over price action.

So far, we have absorbed two notable, third quarter growth readings from major economies; the results couldn’t have shown any greater contrast. Representing the strong face of the emerging market, China reported its economy grew 8.9 percent year-over-year through the third quarter. On the other end of the spectrum, the United Kingdom surprised the market by reporting a 0.4 percent contraction through the three month period ending with September and extending the economy’s worst recession on record. Will the US draw greater similarities to its British or Chinese counterpart? Economists’ expectations are impressive. A projected 3.2 percent annualized pace of growth through the quarter would shed the stigma of recession and bolster hope for a solid recovery on what would be the most significant pace of growth in two years. Gauging whether these projections are reasonable and determining whether the world’s largest economy is on a true pace of expansion, we need to breakdown the major sectors. Government spending plugged the whole but consumer spending, capital investment and a housing recovery are essential for material growth. Housing sales have certainly recovered and construction activity is stabilizing. Earnings through the second and third quarters suggest businesses will pick up production and start spending once gain. Yet, accounting for approximately three quarters of economic output, consumer spending is the backbone of the economy. Confidence seems to have already turned the corner; but consumption and planned purchases are both shaky.

Adding another complication to the high level release, we need to determine whether the dollar will produce a straightforward response to the data or the currency will default to its safe haven role. This is a complicated question; and it depends as much as what is happening with the capital markets heading into the release as the actual data itself. If there is a consistent rise to new heights in optimism, the sentiment aspect will likely win out. Alternatively, if risk appetite happens to commence a meaningful retracement beforehand, the relief for the greenback should allow for an intuitive response.

Keeping everything in perspective though; it is important to realize that the dollar does not have the characteristics of a long-term funding currency. Depressed market rates and benchmark yields are temporary; and there is little reason to doubt policy officials will not be able to work down deficits. Should the US return to growth with this 3Q reading, roles will start to reverse as fundamental realism dawns. On the other hand, a disappointment like that born of the UK’s status report could strengthen the unwanted correlation in the short-term.

Euro Top Remains Elusive, but ECB Rate Forecasts May Bring Reversal

The Euro continued its dominance against the US Dollar for the third consecutive week of trading, closing above the psychologically significant $1.50 mark for the first time in 14 months. Unlike previous weeks, however, the single currency persevered against the safe-haven US Dollar despite relatively lackluster performance in the S&P 500 and other key risk sentiment barometers. Last week we argued that the high-flying EURUSD would increasingly need support from risky assets to continue its impressive rallies. Yet the S&P 500 finished the week 0.75 percent lower and yet the Euro traded higher.

A surprisingly bullish streak for key European economic data seemingly made the difference, and fundamental forecasts for domestic growth remain quite bullish. Whether this is enough to propel the Euro to fresh highs is perhaps another matter, however, and a relatively important string of economic releases could force substantive shifts in Euro forecasts.

Impressive German IFO Business Confidence figures and Euro Zone Purchasing Manager Index numbers set the stage for respectable recovery across broad swaths of the regional economy. Indeed, sanguine growth forecasts have led traders to price in relatively substantial interest rate hikes from the European Central Bank. The lure of higher yields has undoubtedly played a part in Euro/US Dollar rallies, but the extent of Euro appreciation leaves it at clear risk of pullback. ECB watchers will keep a close eye on the coming week’s German and Euro Zone Consumer Price Index figures for important surprises. Current consensus forecasts call for yet another negative year-over-year change in Euro Zone Consumer Prices, but the rate of contraction is expected to narrow to a meager 0.1 percent. Suffice it to say, any material disappointments could make a considerable dent on ECB interest rate expectations. Wednesday’s German CPI figures could subsequently set the tone for near-term Euro/US dollar trading.

Traders will otherwise keep a close watch on global risky asset classes—especially as the Euro’s correlation to the S&P 500 trades near record highs. The US Dow Jones Industrial Average’s close below the psychologically significant 10,000 mark suggests that financial market risk appetite is not quite as robust as previously believed. Yet we would hardly call for a market top without a more substantive pullback across a broad swath of indicators. FX Options market volatility expectations have come down since last week’s peak, but it should be yet another week of eventful price action out of the Euro and US Dollar in the face of noteworthy event risk. - DR